Closing & Funding: practice questions

Which of these figures does NOT appear in the Loan Calculations table of the Closing Disclosure?

1. Total of Payments
2. Amount Financed
3. Cash to Close ✓
4. Total Interest Percentage

Why: 12 CFR 1026.38(o) lists the Loan Calculations table: Total of Payments, Finance Charge, Amount Financed, Annual Percentage Rate and Total Interest Percentage. Cash to Close appears in the Calculating Cash to Close table (1026.38(i)) and on page 1.

Source: 12 CFR 1026.38(o)

The Closing Disclosure understates the finance charge by $80. Is the finance charge treated as accurate?

1. No; any understatement at all makes the finance charge wrong
2. Yes, but only if the APR on the form is also correct to the cent
3. No; only overstatements of the finance charge are tolerated
4. Yes; understatements of $100 or less are treated as accurate ✓

Why: 12 CFR 1026.38(o)(2) treats the disclosed finance charge, and the disclosures it affects, as accurate if it is understated by no more than $100 or is greater than the amount required. An $80 understatement is within that.

Source: 12 CFR 1026.38(o)(2)

How is the lender's title insurance charge labelled in the Loan Costs section of the Loan Estimate?

1. With the title company's name as the whole label
2. With the word "(optional)" at the end of its label
3. Only as part of a single total for all third parties
4. With the words "Title —" at the start of its label ✓

Why: 12 CFR 1026.37(f)(2)(i) and (f)(3)(i) require the introductory description "Title —" at the beginning of the label for any item that is a component of title insurance or is for conducting the closing. The parenthetical "(optional)" is used only in the Other section, for separate products such as an owner's title policy (1026.37(g)(4)(ii) and comment 37(g)(4)-1).

Source: 12 CFR 1026.37(f)(2)(i), (f)(3)(i), (g)(4)(ii)

A rescindable home equity loan closes on a Friday and the borrower receives the notice and all material disclosures that day. There are no holidays. When does the rescission period end?

1. Midnight on the following Monday
2. Midnight on the following Tuesday ✓
3. Midnight on the following Wednesday
4. Close of business on the Friday after

Why: For rescission, 12 CFR 1026.2(a)(6) defines business days as all calendar days except Sundays and federal legal public holidays, so Saturday counts. Under 1026.23(a)(3)(i) the period ends at midnight of the third business day after the last of consummation, notice and disclosures: Saturday, Monday and Tuesday.

Source: 12 CFR 1026.2(a)(6), 1026.23(a)(3)(i)

A homeowner needs home equity funds at once for a genuine personal financial emergency. How can the right to rescind be waived?

1. By initialling the waiver box printed on the creditor's closing form
2. By telling the settlement agent orally at the closing table
3. By a dated, written statement of the emergency signed by all entitled to rescind ✓
4. It cannot be waived for a loan on the principal dwelling

Why: 12 CFR 1026.23(e) lets the consumer modify or waive the right if the credit is needed for a bona fide personal financial emergency, by a dated written statement describing the emergency, specifically modifying or waiving the right, and signed by all consumers entitled to rescind. "Printed forms for this purpose are prohibited."

Source: 12 CFR 1026.23(e)

Which of these details appears under Closing Information on page 1 of the Closing Disclosure?

1. The borrower's credit score and its source
2. The loan officer's commission and the lender's other compensation
3. The appraiser's name and licence number
4. The settlement agent's name and file number ✓

Why: 12 CFR 1026.38(a)(3) lists the Closing Information: date issued, closing date, disbursement date, settlement agent, the settlement agent's file number, the property and the sale price or appraised value.

Source: 12 CFR 1026.38(a)(3)

Two co-owners each have the right to rescind a refinance with a new lender. Only one of them sends a rescission notice in time. What is the effect?

1. It is effective only for the owner who sent it
2. It has no effect unless both owners sign it
3. The rescission is effective for both of them ✓
4. It converts the loan to a single-owner loan

Why: 12 CFR 1026.23(a)(4): "When more than one consumer in a transaction has the right to rescind, the exercise of the right by one consumer shall be effective as to all consumers."

Source: 12 CFR 1026.23(a)(4)

How many paper copies of the notice of the right to rescind must the creditor give each consumer entitled to rescind?

1. One
2. Three
3. Four
4. Two ✓

Why: 12 CFR 1026.23(b)(1): the creditor "shall deliver two copies of the notice of the right to rescind to each consumer entitled to rescind (one copy to each if the notice is delivered in electronic form" under the E-Sign Act).

Source: 12 CFR 1026.23(b)(1)